Irda panel favours 49 per cent FDI in insurance intermediaries

MUMBAI: An internal committee of the insurance sector regulator Irda has recommended hiking FDI in all insurance sector intermediaries like brokers, surveyors, third-party administrators (TPAs) and web aggregators to 49 per cent from the present 26 per cent.

According to reliable industry sources, the panel, headed by joint director Suresh Mathur, has submitted the report to Insurance Regulatory and Development Authority (Irda) chairman last week.

"FDI cap can be increased to 49 per cent for the intermediaries to begin with," an industry source said.

The report has also charted a three-year roadmap to see how FDI can be raised to 100 per cent for intermediaries.

Mathur was not available for comments. The report comes at a time when the Insurance Amendment Bill, that seeks to increase FDI to 49 per cent from 26 per cent, is pending with the House select committee headed by BJP MP Chandan Mitra. The committee is likely to submit its report next month.

The 10-member sub-committee was formed by chairman T S Vijayan in Janaury to find out if the hike in FDI be permitted for the sectoral intermediaries to 100 per cent from the present 26 per cent.

At present, a foreign company cannot hold more than 26 per cent shares in an insurance company. But, in case of insurance intermediaries there is no such restriction.

There was also a consistent demand for increasing the foreign shareholding in insurance brokers from the existing limit of 26 per cent to 100 per cent.

The aforesaid proposed change would not require any modification in the Insurance Act. But, in case of increasing foreign shareholding in an insurance intermediary like TPAs, the law has to be amended.